May 2013 Issue

The 'Newsletter on Financial Fraud' from CustomerXPs is your monthly insight into the various new fraud types and methods used by fraudsters globally in the banking space.

This will help you stay abreast of all the latest happenings in the banking fraud space.

Rise in credit card fraud


The South African Banking Risk Information Centre (Sabric) has warned that counterfeit card fraud remained a national threat.

Fraudsters who clone bank cards are on the increase, as a KwaZulu-Natal businessman found when someone went on a shopping spree, withdrew more than R35 000 from his bank, and indulged in lunches at a fast food outlet over four days.

Kloof businessman, Justin Dallas, said he was driving up to the KZN Midlands with his wife and had stopped at a garage in Cato Ridge for petrol when his card was cloned.

Dallas said when he returned to work a few days later and attempted to make internet payments to several of his suppliers he realized money was missing from his account.

Anton Roberts, who runs several bush lodges in northern KZN, said his credit card was cloned at a supermarket in Hluhluwe where he had bought groceries. His credit card was swiped in Saudi Arabia for more than $1 500 (R14 000) - while he was sipping a beer in St Lucia.

Private investigator Brad Nathanson said he had received more than 20 complaints of card cloning in the past month.

On his Facebook page more than 15 people reported incidents of card cloning at garages, shopping centres and restaurants in Durban and surrounding areas.

Cash withdrawals of between R2 000 and R50 000 were reported.

KZN police spokesman, Colonel Vincent Mdunge, said through crime intelligence it had emerged that counterfeit card fraudster gangs were operating in uMlazi, KwaMashu, Kwandengezi and Mariannhill.

He said gangs were using sophisticated technology, including the internet, to hack into bank accounts.

"These criminals send unsuspecting people e-mails extracting personal information bit by bit. They then use that information to access bank accounts."

He appealed to individuals not to respond to such e-mails and to be vigilant when using ATMs and making card payments. "Cards are cloned in a matter of seconds," Mdunge said.

Source: iOL News

Fear of fraud hold back online banking in Gulf


Fear of fraud and a lack of awareness are holding back users from taking up internet banking in the region. While a third of the GCC population has registered for online banking, a little over half actually use it to conduct banking services and transactions.

HSBC conducted a research across its operations in UAE, Qatar, Bahrain, Egypt, Lebanon and Jordon to understand why customers have been slower to adopt online banking.  It observed that those who do it regularly presser the speed, ease and convenience, and it becomes the preferred channel once they get the hang of it.

"That is a penetration of about 18 per cent in the region. Penetration in countries like Japan and Canada is higher, beyond the 50 per cent mark," said Francesca McDonagh, the regional head of retail banking and wealth management at HSBC Mena.

According to a report by AT Kearney, online banking has been growing at an average rate of 10 per cent year on year in developed markets, where online banking has become a mature channel and penetration stands at about 50 per cent. In the Scandinavian countries, South Korea and Japan, the penetration is closer to the 70 percent mark.

Source: TheNational

Prepaid Credit Card Fraud Makes Criminals Millionaires


Yet again, cybercriminals have landed a huge payday. In a little more than half a day's time collectively, thieves stole approximately $45 million via prepaid credit cards. 

In this case, cybercriminals hacked the databases of one, possibly two payment processors. Since the credit limits on prepaid cards are far lower than the rates on traditional cards, the fraudsters inflated the available balances and removed the daily withdrawal limits. They then sent the card data and corresponding personal identification numbers (PINs) to their "cashers" around the world to encode on the plastic cards and rush to their nearest ATMs to withdraw cash. 

To begin using a prepaid card, all the cardholder needs to do is fund the card with money. For banks, the disadvantage from a fraud detection perspective is that until the cardholder uses the card, banks have no idea what normal activity looks like. Once they detect an anomaly, it may be too late to do anything about it.  

Financial institutions while they have some fraud prevention measures in place, don't always take the necessary steps to fully assess new products and services for fraud vulnerabilities. Typically, fraud and compliance are the last areas consulted on new products, and when they raise concerns, they often experience a wall of silence or outright hostility for being too cautious. 

Source: Memento

HK$9.6 m targeted in online banking scam


More than HK$9.6 million held in company bank accounts was targeted in a sophisticated e-mail scam that tricked 13 people into revealing the code generated by personal security devices banks issue for customers to conduct transactions online, police say.

Although HK$9.66 million was involved, only HK$2.8 million was successfully transferred. Other transactions were interrupted when victims' discovered what was happening before the process ended.

Modus Operandi

Fraudsters sent out e-mails - purporting to come from the victims' actual bank - along with a zip file attachment. Opening the attachment allowed for malware to be inserted into their computers. When the victims tried to open the website of the actual bank, the program steered them to a similar but fake one.

It prompted them to type in their e-banking log-in name, password and the code generated by the security device.

The program would slow and halt the computer's operation, giving the impression that it was processing the transaction and  at the same time, the fraudsters were transferring money out of victims' accounts. Users discovered it when they received text messages from the actual banks notifying them about the transactions. Calls to banks to halt the transactions were made but not everyone was successful.


Source: South China Morning Post  

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